JAN/FEB 2018
INSIDE: THE BANK OF BENNINGTON INVESTS IN ITS COMMUNITY
NEW ENGLAND
THE RESOURCE FOR NEW ENGLAND’S FINANCIAL LEADERS
PLUS: DEALING WITH CONFIDENTIAL INFORMATION IN BANK M&A HOW TO PROJECT CONFIDENCE AND PROFESSIONALISM DURING YOUR NEXT MEETING THE COST SHIFT ADVANTAGE
Best Practices to Grow Your HELOC Portfolio in 2018
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A P U B L I C AT I O N O F T H E WAR R EN G R O U P
CONTENTS
NEW ENGLAND
THE RESOURCE FOR NEW ENGLAND’S FINANCIAL LEADERS
04
The Cost Shift Advantage
05
Top Loan & Mortgage Originators in Rhode Island
06
Projecting Confidence and Professionalism
08
12
14
OPERATING LEVERAGE
16
BEST PRACTICES TO GROW YOUR HELOC PORTFOLIO IN 2018
DATA ANALYTICS
COMMANDING RESPECT REGULATORY ISSUES
Dealing with Confidential Supervisory Information in a Bank Merger or Acquisition
MAINTAINING OVERSIGHT
The Bottom Line: Improved Asset Tracking Can Cut Bank Costs
BANK PROFILE
The Bank of Bennington Invests in its Community
18
PERSONNEL FILE
20
COMMUNITY GOOD WORKS
Best Practices to Grow Your HELOC Portfolio
in 2018
TWG STAFF CEO & PUBLISHER Timothy M. Warren Jr. PRESIDENT David B. Lovins EDITORIAL EDITORIAL & MEDIA RELATIONS DIRECTOR Cassidy Murphy EDITOR Malea Ritz ASSOCIATE EDITOR Mike Flaim
www.thewarrengroup.com
22
INDUSTRY NEWS ©2018 The Warren Group Inc. All rights reserved. The Warren Group is a trademark of The Warren Group Inc. No part of this publication may be reproduced in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without written permission from the publisher. Advertising, editorial and production inquiries should be directed to: The Warren Group, 280 Summer Street, Boston, MA 02210
Interested in receiving additional copies of Banking New England? Call 617-896-5357 or email custompubs@thewarrengroup.com
SALES DIRECTOR OF BUSINESS MEDIA George Chateauneuf PUBLISHING GROUP SALES MANAGER Claire Merritt SENIOR ADVERTISING ACCOUNT MANAGER Michael Lydon ADVERTISING ACCOUNT MANAGERS Megan Kurtz & Jon Patsavos ADVERTISING & SALES COORDINATOR Sandy Liu CREATIVE/MARKETING DIRECTOR OF MARKETING & CREATIVE SERVICES John Bottini COMMUNICATIONS MANAGER Mike Breed COMMUNICATIONS COORDINATOR Joy Cheramie SENIOR BRAND DESIGN MANAGER Scott Ellison GRAPHIC DESIGNERS Amanda Martocchio, Elizabeth Rennie & Tom Agostino
OPERATING LEVERAGE
The Cost Shift Advantage
BY TOM LONG
Tom Long is the principal at The Long Group LLC, based in the Greater Boston area. He may be reached at tomlong@ longgrouponline.com or at 603-424-5664.
4
BANKING NEW ENGLAND
U
ltimately, every organization has the identical purpose, to create operating leverage. This is achieved by growing revenue faster than expenses. Organizations that focus on the achievement of this goal become more productive and efficient overtime. Conversely, organizations that do not recognize the importance of creating operating leverage become inefficient. Layering on additional expense over time without a corresponding lift in revenue equates to inefficiency. In the Exponential Age, where technology and changing consumer behavior are reshaping the banking industry, navigating a financial institution’s legacy cost structure is a requirement in building a scalable business model. Remaining relevant in a changing competitive landscape reshaped by technology is the challenge. Competitors that successfully traverse this challenge will emerge with the ability to capture present and future opportunities. Every institution has a defined capability to absorb change. This is determined by the oranization’s ability to cost shift. Cost shifting cognitively recognizes legacy expense reduction opportunities defining the organization’s capacity to layer on additional investments. Cost shifting removes expenses that should no longer be supported by the organization to encourage and fund necessary business line investments. The branch system, once thriving with traffic, has grown quiet, a result of changing consumer behavior. As a result, the branch network of organizations large and small requires inspection. To accomplish this goal, branch rationalization requires the examination of both client usage as well as market based growth opportunities to determine the optimal branch configuration
required to penetrate and serve a given market. Evaluating and mitigating the business risk associated with attrition is critical to executing a branch rationalization strategy. Branch consolidation benefits represent a vehicle to fund expansion into new markets or to deploy technology within the remaining network. The contemporary cost shift requiring evaluation at every institution is the shift from people to technology. Nowhere is this more prominent than in the branch system as branch based transaction volume continues to decline in preference for alternative delivery channels. Clearly, less transaction volume equates to less staff generating a significant reduction in salary and benefits expenditure. With branch based employee turnover customary, this financial advantage is achieved through attrition. Furthermore, incorporating a universal banker model improves the client experience. As a result, the customer service and financial benefits are compelling. As an illustration of the financial benefit associated with implementing a universal banker model, a five branch financial institution recognized three quarters of a million dollars in rationalized annual savings with the use of The Long Group’s StaffingLab solution. Furthermore, this legacy cost structure is removed in perpetuity. This cost shifting provides the financial flexibility to develop a capital reinvestment strategy to remain competitive. The deployment of technology is a capitalized expense. With an assumed expected life of four years, the bank’s reinvestment plan is amplified by three million dollars. If continuing to fulfill the mission that the organization was founded upon and the communities that it serves remains relevant today, then examining the cost shifting potential of a financial institution is the singular, most important activity to undertake. Remaining relevant in a competitive environment is essential. Choose a partner that can assist the institution navigate this challenge and visualize the opportunity. Discovering how much cost shifting potential your financial institution possesses while ensuring that service quality is maintained is vital. Each organization has more financial flexibility than imagined. Simply put, financial institutions that most appropriately deploy economic resources will create operating leverage and survive. BNE
DATA ANALYTICS
Data Analytics for New England
I
n addition to its publishing division, The Warren Group, publisher of Banking New England, also has a data product and analytics division. Presented here is part of its analysis of the New England marketplace, specifically Rhode Island. Analysis from Maine, Massachusetts and New Hampshire are also available. Here are the top three loan originators for five of Rhode Island’s counties, along with the institution they represent and their ranking in the previous year. Here too are the top three institutions for mortgage
origination and their rankings at the same time last year. Both data sets are for the fourth quarters of 2016 and 2017 and include all residential loans, both purchase and refinance, for all residential loan categories (single-families, condominiums and twoand three-families). HELOC and home equity loan products are not included in the rankings. Loan originator rankings are derived from The Warren Group’s Loan Originators Module; lenders are derived from the Mortgage Market Share Module.
Top Loan Originators Rhode Island Bristol
Kent
Newport
Providence
Washington
Top Mortgage Originators Rhode Island
2017
2016
Name
Institution
2017
2016
Institution
1
3
Johnathon Dee Birs
Stearns Lending
1
6
RBS Citizens Bank NA
2
1
Gina Helm
BankNewport
2
73
Mortgage Network Inc.
3
157
Jesse Kenner
Mortgage Network Inc.
3
2
BankNewport
1
45
Andrew Capozzi
Coastway Community Bank
1
1
RBS Citizens Bank NA
2
1
Beverlee A. Fairbanks
Washington Trust Co.
2
2
Coastway Community Bank
3
183
Keith F. Quinton
Coastway Community Bank
3
4
Quicken Loan Inc.
1
1
Daniel Silverman
BankNewport
1
1
BankNewport
2
14
Mark Carnevale
BankNewport
2
2
RBS Citizens Bank NA
3
6
Cara Millett
Home Loan & Investment Bank
3
6
Quicken Loan Inc.
1
2
Freddie Almeida
Navigant Credit Union
1
1
RBS Citizens Bank NA
2
3
Evelyn J. Perez
First Home Mortgage
2
2
Navigant Credit Union
3
1
Leonarda Conti
Navigant Credit Union
3
3
First Home Mortgage
1
1
Christopher R. Conley
Washington Trust Co.
1
1
Washington Trust Co.
2
4
Gina R. Mead
Washington Trust Co.
2
2
RBS Citizens Bank NA
3
3
William Paul Huggins
Residential Mortgage Services Inc.
3
3
Bank of America NA
Figures are for loans originated in 4Q2017 and 4Q2016 Top Lenders ranked by volume of loans; Originators ranked by number of loans All rankings include purchase and nonpurchase loans for all residential categories HELOCs and home equity loans are excluded Source: The Warren Group’s Loan Originator and Mortgage Market Share modules
Bristol
Kent
Newport
Providence
Washington
For more information please visit www.thewarrengroup.com/business/ data-solutions, email customerservice@thewarrengroup.com or call (617) 896-5388.
BANKING NEW ENGLAND
5
COMMANDING RESPECT CLIENTS PROTECTING VULNERABLE
CONTINUED FROM PAGE 6
How to Project Confidence and Professionalism During Your Next Meeting BY STACEY SHIPMAN
Stacey Shipman is an executive coach and facilitator who specializes in helping business executives strengthen their public speaking and communication skills. Visit www.staceyshipman.com for more information.
Stacey Shipman
P
resentation skills are vital for motivating, engaging and connecting with others. Yet for some bank executives, presenting to groups, sharing ideas in meetings or motivating others is unnerving. Take Joe for example. As a bank marketing executive, Joe excelled at his work. He was smart, accomplished and had a lot of creative ideas. What he lacked was the ability to present his ideas in a clear, compelling way. Joe mumbled, his messages weren’t clear or focused, he spoke in a soft voice and was unable to capture and keep attention. Joe knew this because his boss pulled him aside after a meeting one day and suggested he get some executive coaching. As an executive, Joe needed to power up his leadership presence and ability to command a room, present ideas clearly and ultimately motivate others and get buy-in for his ideas. Mumbling, a lack of focus and his soft-spoken nature wouldn’t get him the results he wanted. Communication is at the heart of business. It’s how leaders motivate and inspire. It’s how teams collaborate and get great work done. It’s how businesses grow and strengthen client relationships. It’s how early and mid-career professionals get ahead. And how you come across during verbal interactions – formal presentations, meetings, individual conversations – matters. Joe worked with a professional coach on his presence and communication skills for a couple of months. Using a holistic approach and astute questions, Joe was able to get at the root of his mumbling, understand the key themes in his presentations and identify ways to power up his leadership presence and command attention when speaking with others. Not only did Joe feel more confident, his boss noticed the positive changes, too. If you or someone you know can relate to Joe, consider the three Cs – confidence, clarity and connection – to project more presence and professionalism during your next meeting, presentation or conversation.
Confidence
The most well-planned conversation or presentation doesn’t matter if you feel uneasy, distracted or unable to focus. To project 6
BANKING NEW ENGLAND
confidence consider both mindset and outward appearance. Create a positive mindset by viewing communication not as a burden but as an opportunity to connect with and help others. To appear confident to others, stand in a tall, open, yet relaxed way. Non-verbals like body language, dress and posture tell a story before words are even spoken. Finally, be grounded in who you are and the unique skills you bring to the table to bring your best self to every interaction.
Clarity
“Winging it” is not an effective communication strategy. You must be able to express your vision, stories and ideas in a clear and compelling way to get buy-in and inspire action. Start with the end in mind by clarifying what you want to happen as a result of the meeting or presentation. Know the audience you’re speaking to and what they need to hear. And keep your message simple. Identify up to three main points to help get your message across and back that up with stories, content and data. To engage audiences include strategies like storytelling, questions, humor and other interactive activities. The best communicators take time to plan for, prepare and practice what they want to say before getting in front of people.
Connection
Once in front of clients, staff or audiences, it’s no longer about the speaker. To build trust and inspire action, employees, colleagues and others use empathy, curiosity and listening to show you care. Your body language, voice tone and variety can help to bring energy, engagement and enthusiasm to your words. Tap into the emotion (yes, you read that right) behind your message or ideas and use that to create a real connection with your audience. Make sure to validate any concerns that come up, ask questions to understand, be quiet and listen.
The Bottom Line?
Just as banking is a people business so is communication. Like Joe, you may have great ideas and to make those ideas heard, commit to do the work to see the results. Your ideas matter. Whether you’re a nervous speaker or a seasoned pro, remember the 3Cs – confidence, clarity, connection – to get better results from your verbal communication. BNE
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REGULATORY ISSUES PROTECTING VULNERABLE CLIENTS
CONTINUED FROM PAGE 6
Dealing with Confidential Supervisory Information in a Bank Merger or Acquisition BY STANLEY V. RAGALEVSKY AND ROBERT M. TAMMERO JR.
Stanley V. Ragalevsky is a partner and Robert M. Tammero Jr. is an associate in K&L Gates LLP’s Boston office.
Stanley V. Ragalevsky
Robert M. Tammero Jr.
A
serious regulatory issue can derail a bank merger or acquisition. Sometimes a bank will begin a transaction with a known, pre-existing regulatory issue, and other times an unanticipated regulatory issue develops during the course of a transaction. Both scenarios present challenges. In either case, the bank must treat the issue with a high degree of sensitivity and avoid any missteps that could cause the transaction to implode, tarnish the bank’s reputation, and expose the bank and its officers and directors to liability or criticism from its regulators. A bank’s “regulatory issue” and any documents describing it, including the bank’s internal assessments of the issue, may comprise or contain “confidential supervisory information” (CSI) and therefore be subject to strict regulatory limitations on disclosure. There is a tension between these limitations and the terms of a typical merger or acquisition agreement; the bank would usually have an obligation under the agreement to fully disclose the issue to the other party to the transaction, but is generally prohibited from doing so under the 8
BANKING NEW ENGLAND
law. Thus, the bank may find itself in an impossible position – breach the agreement and subject itself to liability and reputational harm or disclose the issue and violate the law. Banks’ obligations regarding CSI are defined by the regulations of the various federal bank regulatory agencies. There are subtle but important differences between these agencies’ respective regulations, including in the definition of CSI and to whom and under what circumstances CSI may be disclosed. In general, though, CSI includes reports, records, and other documents prepared by, on behalf of, or for the use of, an agency with regulatory or supervisory responsibility over the bank (e.g., the Federal Deposit Insurance Corp. (FDIC), the Board of Governors of the Federal Reserve System or a Federal Reserve Bank (collectively, the Federal Reserve), or the Office of the Comptroller of the Currency (OCC)). Examples of CSI include supervisory communications between a bank and its regulator, CONTINUED ON PAGE 10
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REGULATORY ISSUES PROTECTING VULNERABLE CLIENTS
CONTINUED FROM PAGE 6
“To avoid a potentially damaging outcome, banks should conduct comprehensive due diligence on their potential merger or acquisition targets, as well as self-assessments of their own regulatory status, before beginning a transaction. ” examination reports, supervisory ratings, non-public enforcement actions and internal bank documents discussing any of these matters. Part 309 of the FDIC’s Rules and Regulations (Part 309), for example, generally prohibits a state nonmember bank from disclosing CSI other than to its officers, directors, employees, or agents who have a need for the CSI in the performance of their duties. (The federal bank regulatory agencies take the position that CSI is the exclusive property of the regulator, and therefore, absent an applicable exemption, CSI may not be disclosed without the regulator’s express authorization.) Unauthorized or improper disclosure of CSI could subject the bank and any of its officers, directors, employees or agents who are involved in the disclosure to adverse supervisory action, including the imposition of civil money penalties, and even criminal penalties. Suppose a bank that is negotiating a merger is subject to a memorandum of understanding with its primary federal regulator regarding its compliance with certain consumer laws. The typical merger agreement contains pages of representations and warranties, some of which would require
the bank to disclose this information to its prospective merger partner. For example, the agreement may contain representations that the bank is, and has been for a specified period of time, in compliance with all applicable laws, is not subject to any governmental or regulatory proceeding or investigation, and is not subject to any order or agreement that restricts the bank’s business. Any inaccuracy in, or breach of, any representation or warranty could give the other party to the transaction the right to terminate the agreement and subject the bank to liability. A prospective merger partner with experienced advisors will not allow the bank to simply negotiate these representations and warranties out of the agreement. So how should the bank proceed? First, the agreement should contain a qualification that none of the bank’s representations or warranties will be deemed to be breached, inadequate, or incomplete because of the nondisclosure of CSI. This qualification will help protect the bank from liability for not disclosing its regulatory issue under the agreement. Of course, including this kind of qualification may prompt questions from the other party about the bank’s regulatory status. The bank will not
be able to address these questions directly, because of the regulatory limitations on disclosure of CSI, but it might be able to refer the other party to publicly available information that could shed light on the issue. For example, the bank’s quarterly Call Reports filed with its primary federal regulator and its periodic filings with the Securities and Exchange Commission (SEC) (if the bank is an SEC reporting company), as well as any public enforcement actions involving the bank, might all contain relevant information. But public information will only reveal so much about the regulatory issue at hand. If the other party decides to move forward with the transaction despite the specter of a regulatory issue, it may seek to include various contractual protections in the agreement, in case the issue delays the closing of the transaction or results in a serious problem after the transaction closes. Such protections may include special rights to terminate the agreement, special indemnities and separate escrow funds to support such indemnities, and “break-up fees.” Additionally, the bank should be sure that the other party’s information rights under the agreement are appropriately limited, so as to avoid any contractual obligation to disclose CSI to the other party during the pendency of the transaction. For example, sometimes a merger or acquisition agreement will permit the other party (for example, where the other party is the acquirer) to have one or more observers present during any of the bank’s board or committee meetings that take place between the time the agreement is signed and the closing of the transaction. It might also require the bank to provide the other party with the same written “board package” that the bank’s directors or committee members receive in connection with any such meeting. In these cases, the agreement should preclude the other party’s observers from attending any portion of any board or committee meeting where CSI is discussed, and should provide that any CSI will be redacted from any written board or committee materials that are provided to the other party’s observers. The bank’s directors, and in particular its chairperson, should be informed of these limitations in advance, so that CSI is not inadvertently disclosed to the other party’s observers at a board or committee meeting.
A regulatory issue that develops during the regulatory approval process for a transaction presents even thornier concerns. A typical merger or acquisition agreement contains various pre-closing covenants – commitments of each party to do or refrain from doing certain things during the pendency of the transaction. Among these covenants is usually an undertaking to inform the other party of significant matters that arise between the time when the agreement is signed and the closing of the transaction. In addition, as part of, and as a condition to, closing the transaction, the parties typically certify to each other in writing that their respective representations and warranties in the agreement are true and correct as of the time of closing. A bank with a regulatory issue may not be able to satisfy these covenants or give this certification due to the regulatory limitations on disclosure of CSI, and therefore may find itself in breach of covenant under the agreement or unable to satisfy all of the conditions in the agreement to closing the transaction. In the context of a stock transaction, particularly one involving a publicly traded bank, the possibility of stockholder litigation in the event that the transaction falls through can make the situation especially worrisome for the parties’ respective boards and management. Furthermore, a serious regulatory issue that develops between the signing of the agreement and the closing of the transaction is likely to at least delay receipt of the necessary regulatory approvals for the transaction, sometimes indefinitely. Bank regulators generally will not approve a merger or acquisition where a party to the transaction has a significant, unresolved regulatory issue. Where multiple regulatory approvals are required, often the other regulatory agencies involved will wait for the surviving institution’s primary federal regulator to issue its approval of the transaction before issuing their approvals, which can also extend the timeline for the transaction. These delays can jeopardize the transaction. In particular, a typical merger or acquisition agreement will fix an outside date – often 12 months or so after the date when the agreement is signed – after which either party can terminate the agreement without penalty if the transaction has not closed. A bank that develops a regulatory issue after signing a merger or acquisition
agreement but beore the transaction closes may wish to petition its regulator to allow the bank to provide some information about the issue to the other party to the transaction, in order to preserve the relationship and keep the transaction moving forward. Under Part 309, for example, such a request must be made in writing and specify, with reasonable particularity, the CSI that the bank wishes to disclose and the bank’s interest in disclosing the CSI. The bank’s request may be granted, in the FDIC’s discretion, for “good cause.” Regulators do not routinely accommodate these requests. Any such request should be specific and narrowly tailored to the circumstances to maximize the bank’s chances of the request being granted. Without permission from its regulator to disclose the issue, the bank and its counsel will be in the awkward position of having to deflect questions from the other party about why regulatory approvals have not been granted within the expected timeline. A regulatory issue can be a major impediment to completing a successful bank merger or acquisition. It can significantly
delay (and even prevent) receipt of necessary regulatory approvals for the transaction, lead to contractual liabilities and reputational harm, and strain the parties’ relationship. At a minimum, it puts the affected bank and its management in a difficult and uncomfortable position. To avoid a potentially damaging outcome, banks should conduct comprehensive due diligence on their potential merger or acquisition targets, as well as self-assessments of their own regulatory status, before beginning a transaction. The parties should also approach their regulators on an informal basis to “vet” the transaction in advance. If possible, it may also be helpful to begin the transaction process just after one or more of the parties complete a successful examination cycle, so that party has relative confidence that its regulatory status will not be an impediment to closing the transaction. Once the agreement is signed, regulatory applications are filed, and the pending transaction is made public, the parties’ options for effectively dealing with a regulatory issue become more limited. BNE
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BANKING NEW ENGLAND
11
PROTECTING VULNERABLE MAINTAINING OVERSIGHT CLIENTS
The Bottom Line: Improved Asset Tracking Can Cut Bank Costs BY RENAUD MEGARD
Renaud Megard is president and CEO of NFI Corp. (Nameplates for Industry), a New Bedford, Massachusettsbased business established in 1975. Visit www.NFIcorp.com to learn more.
Renaud Megard
12 BANKING NEW ENGLAND
F
or banks, credit unions and other financial institutions, keeping track of work-related assets like computer screens, hard drives, printers, office desks, client chairs and communal work stations is a constant challenge that, when not properly managed, results in decreased productivity and additional expenses (where are they, when did we buy it, how much did we buy it for, when will it be fully depreciated, when should it be replaced?). Yet by implementing a robust asset tracking/asset management system throughout their institution, banking organizations can keep much better track of what they have, and as a result, make more informed decisions regarding future purchasing while reducing expenses and positively impacting overall productivity. To start, banking organizations should take a close look at their current asset tracking practices. In doing so, they may discover that the actual location of multiple items (such as laptop computers, IT equipment, furniture and other costly physical assets) simply is unknown. Additionally, many past purchases will turn out to have been unnecessary, because an identical item is later found in storage or at another location. These discrepancies occur despite some organizations’ attempts to institute some hit-and-miss asset tracking procedures – without a complete commitment to asset tracking, financial organizations are often surprised to learn how many items are not tracked and have been misplaced, lost or even stolen. A robust asset tracking program will help banking institutions tightly control physical assets – and cut costs. Many financial organizations have multiple branches and office locations nationally or internationally, which makes tracking property, plant and equipment (PP&E) exponentially more complex. Most likely, these larger organizations have basic asset tracking procedures put in place through their facilities or IT departments. Yet, thanks to advances in technology, an all-encompassing asset management program can be significantly more robust and leak-tight. And when it comes to managing assets, running a tight ship will cut costs. Tips to track and tightly control tangible assets: • Typical physical assets include an organization’s computers, audio/visual equipment, IT
equipment, vehicles, furniture, tools and the like. Tracking tangible assets involves assigning a unique identification number to each asset. ID numbers could be serial numbers as well as barcodes or QR codes that are scanned via a mobile app. Some businesses use RFID readers and GPS tags to provide real-time location of their assets. Asset tags are adhered to the physical property, and the number is added to the asset tracking system. • High-quality custom asset tags (also known as security labels or inventory control tags) are an important piece of the asset management puzzle. Clearly, durable label material combined with long-lasting adhesive is imperative. Quality asset tags utilize sub-surface printing techniques. This means information is printed on the reverse side of a specific type of plastic (glossy or textured). This sub-surface printing technique protects the ink, color and image to ensure the asset tag is durable and long-lasting. This manufacturing approach makes your custom asset tags resistant to abrasion as well as all types of outdoor weather conditions. Sequential serial numbers may need to be digitally produced or hot-stamped. Alternatively, imprintable labels allow individuals to type or handwrite information onto property tags, such as maintenance schedules. • In addition to identifying assets, some financial organizations need to discourage theft of certain items with “tamper-proof ” asset tracking labels. There’s a lot of confusion around this term, so here’s a quick primer. Known as being tamper-evident, tamper-proof, or tamper-resistant labels, these labels warn any against any potential nefarious action by stating the label is “Void if removed.” When someone tries to lift off this label, the message underneath says “VOID” or shows a pattern. Another type called destructible vinyl labels (also known as indestructible labels) disintegrate into tiny pieces when someone tries to remove them, which can thwart potential theft. This type of sticker shows clear evidence of being disturbed.
• Asset management software is also an important piece of the puzzle. Searching on the phrase “asset tracking software” will reveal a wide variety of software programs. Some features to investigate include: a check-in/checkout feature, maintenance schedules, parent/child hierarchical relationships, full life cycle management, storage and inventory features, depreciation and “retiring” assets and, of course, robust reporting functions. This year, track and tightly control tangible assets to reduce expense growth. A robust asset tracking program implemented throughout a financial organization will cut costs and improve the financial institution’s bottom line. By giving employees the tools to quickly locate any physical asset when needed, disruptions in operations will be reduced, the expense of purchasing unnecessary equipment will be avoided, and managers throughout the organization will be empowered to make more informed purchasing decisions. BNE
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BANKING NEW ENGLAND
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PROTECTING BANK PROFILEVULNERABLE CLIENTS
The Bank of Bennington Invests in its Community
BY LINDA GOODSPEED
I James D. Brown President & CEO The Bank of Bennington
14 BANKING NEW ENGLAND
t is no surprise that The Bank of Bennington is the only financial institution involved in a $53 million redevelopment of its downtown namesake, Bennington, Vermont. After all, community involvement and investment has been a hallmark of the bank since its founding 100 years ago. Bennington has a population of 16,000 and is located in the southwest corner of Vermont. Like many small New England towns, it has seen a once vibrant downtown deteriorate as traditional manufacturing and industries closed. “Bennington is a beautiful place, the first town in Vermont coming from Massachusetts and New York,” said James D. Brown, president and CEO at Bank of Bennington. “But like many rural towns in Vermont, we have our challenges.” To address some of those challenges, the bank, along with other community and business leaders, came together to kick off the redevelopment of the Putnam Block in the heart of the city. The 4-acre eyesore, once home to the Putnam Hotel, will be historically preserved and transformed into a mixed-use development, including housing, retail and office space. “The Putnam Block is essentially a quarter of the downtown,” Brown said. “The hospital, local
colleges, us, industry leaders all came together to try and reverse the decline of that area. None of us expect a financial return from this. We simply feel it’s important to revitalize Bennington’s downtown, which will help all of us eventually. We’re not doing a real estate investment. We’re doing community investment.” The Bank of Bennington, the only Vermont bank headquartered in the county, is also the only financial institution invested in the project. That community mindedness dates back a century to the bank’s founding on May 14, 1917, with a mission to raise $10,000 to solve the problem of insufficient housing for area workers. The bank, which now has more than $400 million in assets, has remained true to that mission. Its total loan portfolio of about $330 million is made up of almost $250 million in residential mortgages, three times the size of its $80 million commercial loan portfolio. Brown said some of the disparity is due to lack of commercial loan demand since the Great Recession. “There hasn’t been that much commercial business the last few years,” he said. “We’re seeing more activity now. We have room on our balance sheet to grow our commercial business. But we are not going to chase deals just to keep our portfolio up.”
The board of directors of the bank, apparently in good humor, enjoy having their picture taken at a board meeting in January 1934. Standing left to right are Harry Wills, Daniel C. Hurlbut, Fred Martin and John J. Hayes; seated left to right: William P. Hogan, Daniel J. Keeler, Hiram Hall, William H. Wills and Lee Warner (seated ahead of Keeler).
On the residential mortgage side, the bank came through the mortgage meltdown relatively unscathed. “Because we hold most of our mortgages in-house, we didn’t do any no documentation, no verification loans so our portfolio did pretty well though property values declined which didn’t help our customers,” he said. Even during the Great Recession, the bank never had a losing quarter. In fact, Bauer Financial, an independent bank-rating service, has awarded Bank of Benington its 5-star rating, the highest level of strength and performance, for more than 100 straight quarters. Over the years, the bank has slowly expanded its footprint north along Vermont Route 7, and now has offices in Arlington, Manchester and most recently Rutland in 2016. The bank employs about 60 people, with an average tenure of more than 10 years. “We have a lot of long-term employees. We think that’s an advantage,” said Brown, an employee at the bank since 2001 and president/ CEO since 2008. “One of the challenges of operating in a rural market is there aren’t commercial lenders at another bank you can just hire away. We have to grow our own.”
As the bank’s investment in the Putnam Block redevelopment illustrates, Bank of Bennington is known for its community involvement. Over the last 10 years, the bank has donated more than $650,000 to local nonprofits. The bank’s employees donate another 3,000 volunteer hours annually. While the bank has been out in front in the community, Brown said it has lagged behind on the technology side. “We went through a conversion two years ago to a better platform and mobile banking,” he said. “It took too long to get up and running. Now that we have it, we want to continue to implement new technology. We’re adding on wherever we can so we’re on the forefront of technology and not the back end. It goes without saying that we’re also investing a lot in cyber security so we can make sure all those risks are mitigated as best we can. It means having good partners, being ready to spend money to do it.” Brown said capitalizing on technology, growing the bank’s deposit base and “taking care of our customers” is the bank’s plan for the future. “We’re always looking for opportunities,” he said. “Opportunities are like risks; they are different today from what they were eight years ago, and will be different from eight years ahead. It’s a cultural mindset. You have to be able to adapt.” BNE
William Wills (above) was one of the bank’s notable founders; he also founded Wills Insurance Agency in Bennington and was the governor of Vermont from 1941–1945.
BANKING NEW ENGLAND
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LOAN GROWTH
Best Practices to Grow Your HELOC Portfolio in 2018
David Carlson
David Carlson is a senior vice president at Haberfeld Holdings, a data-driven consulting firm specializing in core relationships, customer and profitability growth for community-based financial institutions. Carlson can be reached at (402) 323-3600 or dcarlson@haberfeld.com.
16 BANKING NEW ENGLAND
BY DAVE CARLSON
H
ome equity lines of credit (HELOCs) are again becoming a relevant strategic instrument to accelerate loan growth. While consumer interest in HELOCs has revived and will likely continue growing, many financial institutions are struggling to capitalize on these opportunities. 2017 began with several key housing and economic indicators pointing favorably to a continued resurgence in HELOCs. However, despite these decidedly HELOCfriendly indicators, HELOC growth is proving to be an uphill climb. In the first quarter of 2017, the dollar volume of HELOC originations was at a three-year low. The pace quickened in Q2 but origination growth still lags behind 2016 performance. It’s not that
community financial institutions aren’t trying. Many are devoting considerable resources to gain traction with HELOCs, only to have their efforts rewarded with lackluster results. If you ask an officer at one of these under-performing institutions to explain their financial institution’s subpar HELOC results, they might point you to a long list of legitimate frustrations. Often, these are valid concerns; however, a select number of community financial institutions are successfully identifying and attracting new borrowers through the use of innovative strategies. The results – significant growth through increased loan volume and enhanced income. What’s the differentiator? Why are some financial institutions succeeding while others flounder? Research shows successful execution of a HELOC strategy requires attention to three key areas: process, product and promotion. While many financial institutions may believe they have these elements in place, most do not have a formal foundation to drive actual results.
Process
Without a defined process, a successful HELOC strategy cannot be effectively implemented. Developing a consistent organizational process includes: (1) internal education for all team members and (2) a dedicated internal process.
Internal Education Internal education should focus on recognizing HELOC opportunities – specifically, what is a HELOC and how consumers can actually use a HELOC. In addition, employees need to know who the dedicated product owner is and how to make a successful referral to the HELOC specialist.
Internal Process The HELOC growth strategy must have dedicated owners who are HELOC experts. Each product owner must have access to an online application process which is well-defined, intuitive and easy to navigate. In addition, financial institutions must have clear processes around loan closings. Specifically, what is the internal documentation process and where will they be closed (e.g., in branch, online, in a lender’s office, etc.)?
Product
With the process defined, it is time to focus on the product. Although it isn’t always obvious with a product such as HELOCs, there are significant ways a financial institution can differentiate itself. For example, will your financial institution focus on a fixed-rate offer or an introductory rate offer? Consumers will want to compare rates, so it is important to understand how compelling your rate offering will be to prospects. Other items for consideration include decisions
regarding closing costs and credit quality – essentially, will you charge closing costs and what will your risk tolerance be as it relates to consumer credit scores. Like our other products, HELOCs are most successful when financial institutions pair a compelling product offering with targeted marketing and differentiating service.
Promotion
Once you have the right process and products in place, the final step is promotion. A random survey of many websites shows most financial institutions don’t even promote their HELOC offerings. The first step in effectively promoting HELOCs is to include them on your organization’s website. The next and most important part is to utilize data to make strategic decisions. Imbedded in your financial institution’s data is a wealth of information regarding targeting opportunities, specifically, who are your best customer or member HELOC targets? When this information is paired with non-customer or member targeting information based on external data sources, a financial institution can then successfully implement a targeted omni-channel marketing approach to increase HELOC acquisition. HELOC promotion utilizing an omni-channel marketing approach includes a variety of sequenced and targeted methodologies. For example: • Emailed offers to targeted customers or members directing them to a HELOC microsite • Digital integration with social media through strategically placed digital marketing • Promotional visibility at your branches • Targeted mailings to high probability prospects • Digital display ads to targets across multiple electronic devices When executed properly, the impact of targeted marketing drives actual results. A case study highlighting one financial institution’s success with an omni-channel marketing approach shows an 11-branch institution that implemented its first HELOC growth strategy in Q1 of 2017. Even with the dollar volume of HELOC originations at a three-year low nationally, the following results were achieved: • Averaged 15 additional funded HELOC loans per month • Recouped marketing investment early in Q3 • Doubled new HELOC production The time for a proven HELOC strategy is now: (1) The resurgence in HELOCs represents a significant opportunity for community financial institutions to boost loan volume, (2) The current underlying economic fundamentals are conducive to HELOC growth and (3) Consumer interest exists. In order to capitalize on this opportunity, financial institutions must now decide if they are willing to design and deploy a HELOC strategy consumers will embrace. BNE BANKING NEW ENGLAND
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PROTECTINGFILE VULNERABLE CLIENTS PERSONNEL
Career achievers in banks across New England are constantly on the move, with their professional journeys reflecting a combination of mobility and longstanding service. In this space, we acknowledge them, and welcome readers to submit news of their own banks’ efforts and endeavors to Editor Malea Ritz at mritz@thewarrengroup.com
Featured Banks • BankNewport • BayCoast Bank • Eastern Bank • Franklin Savings Bank • KeyBank • Meredith Village Savings Bank • Norway Savings Bank • The Provident Bank • Webster Bank
Appointments and Elections BankNewport
Eastern Bank
Lynn M. Wagner was appointed vice president and branch sales manager of at BankNewport’s Narragansett branch. She will be responsible for branch operations, business Lynn M. Wagner development and staff development. Wagner comes to BankNewport from American Eagle Financial Credit Union in Connecticut where she was branch manager of its Middletown branch. Susan M. Viveiros was appointed vice president and information security officer. She will be responsible for the development and implementation of the bank’s information/cyber security, Susan M. Viveiros vendor management and business continuity programs. Viveiros comes to BankNewport from HarborOne Bank in Brockton, Massachusetts, where she worked as vice president and information security officer. William J. Griffin was appointed assistant vice president and mortgage originator. He will be responsible for the Providence County residential mortgage portfolio, in addition to providing education and awareness to community members regarding new home ownership financing. With over 20 years in the banking and mortgage industry, Griffin comes to BankNewport from Citizens Bank in Providence, where he was a senior loan officer.
For the first time in its 200-year history, Eastern Bank has chosen a woman to lead its board of directors. Deborah Jackson had been tapped for the post. Jackson is the first woman Deborah Jackson and second person of color to serve as Eastern’s lead director. She has sat on the board since 2000 and was most recently chair of the Nominating and Governance Committee. Jackson succeeds Wendell Knox, who has been lead director since 2009 and a member of Eastern’s board since 1995.
Webster Bank Frederick M. Smith has been named corporate controller of Webster Bank and Webster Financial Corp. Smith brings more than 25 years of financial services industry experience. Smith will be a senior leader in Webster’s accounting department and oversee the corporation’s accounting operations, close and consolidation, and financial reporting activities. Smith joined Webster in 2005 as vice president and external financial reporting manager, and has since held several roles in the company’s accounting department. Prior to joining Webster, he held positions of financial analysis and reporting at The Hartford Steam Boiler Inspection & Insurance Co. and Aetna Inc. in Hartford, Connecticut.
Promotions BankNewport
BankNewport promoted Joseph J. Arver to vice president of financial planning. Arver joined BankNewport in 2016 and most recently was vice president and senior financial analyst. He will be responsible Sarah E.M. Stanley for leading asset-liability and liquidity management, budgeting, financial forecasting and investment analytics, in addition to developing business line and product profitability. 18 BANKING NEW ENGLAND
Franklin Savings Bank
Franklin Savings Bank promoted Sarah E.M. Stanley to community relations and CRA officer; Ulrike Smith to quality control and HMDA manager; Dawn Phelps to assistant vice president, retail lending officer Sarah E.M. Stanley and team leader; and Kimberly Bliss to commercial lending assistant. In her new role, Stanley will continue her community relations efforts as well as administering
Promotions
New Arrivals Franklin Savings Bank
Ulrike Smith
Dawn Phelps
Kimberly Bliss
all aspects of the bank’s Community Reinvestment Act Compliance Program. She joined FSB in 1998 in the marketing department where she advanced into a few positions until she transitioned into the role of community relations officer in 2015. Smith will assume the responsibilities of quality control and HMDA manager where she will have oversight of the administration and management of all commercial and residential lending quality control compliance, along with the administration and management of all Home Mortgage Disclosure Act compliance. She joined FSB in 2014 as loan operations manager, then transitioned to residential/consumer project manager in 2017. In her role as assistant vice president, retail lending officer and team leader, Phelps will oversee the strategic and new business development responsibilities for the residential lending department and will manage the residential lenders. Phelps started with FSB in 2003 as a mortgage loan originator. In 2004, she was promoted to mortgage loan officer, then to assistant vice president and retail lending officer in 2013. Bliss joined FSB in January 2017 as a commercial lending assistant in the commercial lending department. As the bank continues to experience growth in its commercial lending division, Bliss will develop and enhance her skills in credit analysis.
KeyBank
Allison Standish-Plimpton
KeyBank promoted Allison Standish-Plimpton to senior vice president and business banking team leader for Key’s Connecticut and Western Massachusetts market. With more than 20 years of experience in commercial banking, she leads an experienced team of highly trained local bankers focused on providing a wide variety of innovative financial solutions.
New Arrivals BayCoast Bank
New Bedford, Massachusetts-based BayCoast Bank hired Joseph P. Lopes as vice president and commercial loan officer. Lopes will develop and service loans and lines of credit, while attending to commercial customers’ financing and additional banking needs. His responsibilities also include counseling current and prospective customers to Joseph P. Lopes help them achieve business goals. Lopes joins BayCoast Bank with more than a decade’s experience in the financial services industry, most recently as a loan officer with the Massachusetts Growth Capital Corp. in Charlestown, Massachusetts.
New Hampshire-based Franklin Savings Bank recently welcomed Renee Baldini to its team. She will assume the role of branch manager at the bank’s main office in downtown Franklin. She is responsible for coaching and supporting sales, service and operational initiatives for her team. Baldini brings 20 years of experience in banking having worked for Granite Bank as a commercial loan administrator for four years, and People’s United, where she held positions in both retail and marketing for 13 years. She most recently worked as director of development and marketing for Beckwith Development Enterprises LLC.
Meredith Village Savings Bank
Christopher Dickinson joined Meredith Village Savings Bank (MVSB) as vice president of business development and small business lending. Dickinson offers a full range of banking solutions to local business owners, municipalities and nonprofits. Prior to joining MVSB, Dickinson held leadership positions in retail banking, small business banking Joseph P. Lopes and commercial lending. Most recently, he was the chief credit officer for a financial institution based in the Boston area.
Norway Savings Bank
Maine-based Norway Savings Bank hired Pam DiPietro Hale as vice president of commercial lending. Hale will work closely with existing commercial customers, as well as focus on building new relationships with business owners in every phase of the business lifecycle. She is responsible for ensuring that customers receive an exceptional Pam DiPietro level of service while providing valuable business solutions and sage advice. Hale comes to Norway Savings with more than 22 years of banking and commercial lending experience.
The Provident Bank
David Gagnon joined Amesbury, Massachusetts-based The Provident Bank as senior vice president and senior commercial credit officer. Gagnon is responsible for managing the bank’s credit functions, including underwriting, structuring, processing and loan approvals and will lead a team of 19 credit and SBA specialists. David Gagnon During his 11-year tenure at TD Bank, Gagnon was most recently, senior vice president and senior credit officer. Prior to TD Bank, he spent nine years at Citizens Financial Group in both credit and lending capacities. BNE
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PROTECTING GOOD VULNERABLE COMMUNITY WORKS CLIENTS
Financial institutions large and small have been making a difference in their communities for years. In this space, we acknowledge them, and welcome readers to submit news of their own banks’ efforts and endeavors to Editor Malea Ritz at mritz@thewarrengroup.com
Featured Banks • Androscoggin Bank • Bar Harbor Bank & Trust
Androscoggin Bank
Lewiston, Maine-based Androscoggin Bank’s MainStreet Foundation designated its annual $25K for Kids grant to St. Mary’s Nutrition Center at the end of 2017.
Bar Harbor Bank & Trust
• Lake Sunapee Bank • Ledyard National Bank • First County Bank • Franklin Savings Bank • HarborOne Bank • Hometown Bank • Jewett City Savings Bank • Key Bank • North Brookfield Savings Bank
Maine-based Bar Harbor Bank & Trust donated $12,340 through the bank’s community commitment program during 2017. In this photo, a check is presented to the Deer Isle and Stonington Fire Departments.
Lake Sunapee Bank
New Hampshire-based Lake Sunapee Bank, a division of Bar Harbor Bank & Trust, is supporting the Newport Library Arts Center Gallery and Studio with a three-year pledge to the Arts Center’s endowment fund. The bank distributed $25,000 to the center. 20 BANKING NEW ENGLAND
Ledyard National Bank
New Hampshire-based Ledyard National Bank donated $1,000 to the Capital Region Food Program. Ledyard’s employees also donated their time, packing some of the over 4,400 boxes going to 2,200 families in the greater Concord area.
Franklin Savings Bank
First County Bank
Anthony and Grace Aversano were named the winners of First County Bank’s FirstPrize $avings account $1,000 drawing. The FirstPrize $avings account is a basic savings account with a cash prize drawing component to promote personal savings. With each eligible deposit of $25 or more, the account holder earns an entry into a drawing for a $1,000 prize.
HarborOne Bank
New Hampshire-based Franklin Savings Bank over $16,900 for its Granite United Way Pacesetter Campaign. From this total, the bank provided a dollar for dollar matching contribution of over $8,400. The funds raised for Granite United Way will be used to support three community impact areas, including education, income and health across New Hampshire.
Hometown Bank
Massachusetts-based HarborOne Bank will award 20 college scholarships of $5,000 each to high school seniors who embody a commitment to community and academic excellence as part of its ONECommunity Scholarship Program. In 2016, through the ONECommunity Scholarship Program, HarborOne pledged $1 million over 10 years to provide college scholarships to selected high school students.
Jewett City Savings Bank
Hometown Bank, with locations in Massachusetts and Connecticut, donated $5,000 to NewVue Communities, formerly known as Twin Cities CDC. NewVue Communities is a Fitchburg-based nonprofit organization that serves 22 communities in central Massachusetts. The organization works to improve local communities and the lives of their residents, regardless of their background.
Connecticut-based Jewett City Savings Bank awarded $4,700 in grants in support of arts and cultural projects.
KeyBank
North Brookfield Savings Bank
North Brookfield Savings Bank awarded West Brookfield, Massachusetts resident Daniel Bigda with a $100 gift certificate for being the November winner of North Brookfield Savings Bank’s Hat Contest.
KeyBank Foundation has donated $25,000 to Hartford LISC to support its mission of helping community residents transform distressed neighborhoods into healthy and sustainable communities of choice and opportunity, creating good places to work, do business and raise children. LISC will leverage Key’s investment to support multiple LISC outcomes, including eliminating blight, creating new positive physical development, helping families stabilize incomes and build assets, and stimulating local jobs and businesses. BANKING NEW ENGLAND
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PROTECTING VULNERABLE CLIENTS INDUSTRY NEWS
CFPB Will Reconsider Payday Rule By Bram Berkowitz
The Consumer Financial Protection Bureau intends to engage in a rule-making process to reconsider the Payday Rule, which could result in a full repeal or significant revision. A payday loan is a small, short-term and unsecured loan, typically with high rates that must be repaid in a few weeks or typically on the borrower’s next payday, hence the name. The products have received criticism for squeezing borrowers already in tight financial situations. The proposed payday rule would require lenders to determine upfront whether people can afford to repay the loans. The decision to try to revise or repeal the rule illustrates the dramatic shift in the consumer watchdog agency since President Donald Trump named Mick Mulvaney as director. Sen. Elizabeth Warren, who helped create the CFPB, immediately blasted the decision to reconsider the rule. Other organizations also came out against the decision, but not all were opposed. “Under the current rule, many banks are forced to sit on the sidelines and prevented from offering affordable and popular small-dollar credit options to help meet the needs of their customers,” Hunt added. “As the CFPB reconsiders this rule, we encourage the Bureau to work with bank regulatory agencies to examine the use of bank-offered small-dollar lending products, such as deposit advance products, and ensure any final rule treats all banks equally.” The rule technically went into effect Tuesday, but the CFPB said most of it would not be enforced until August 2019.
Citizens Bank Launches New P2P Service Citizens Bank recently announced the launch of a new person-to-person platform through their mobile and online banking apps. Zelle allows customers to transfer funds from one bank account to another in minutes, using only a recipient’s email address or mobile number. Customer account information stays protected as neither party can see the other’s account information. “The needs of our customers continue to evolve and we are pleased to leverage innovative digital technologies that create better end-to-end experiences in the areas that matter most,” Beth Johnson, chief marketing officer and head of virtual channels at Citizens Bank, said in a statement. “We want to be 22 BANKING NEW ENGLAND
the first place our customers turn when they need to send or receive money, and becoming part of the Zelle network will allow us to deliver a convenient, userfriendly P2P payments experience.” Using either the latest version of the mobile banking app or Citizens Bank online banking, users can look for and select “send money with zelle.” From there, users can follow the enrollment steps. Consumers using Zelle can send money to almost anyone with a bank account in the United States who is registered with Zelle. This offering continues Citizens Bank’s digital innovations, having recently introduced a digital advisory service called SpeciFi from Citizens Investment Services to offer customers integrated banking and digital investment services. The bank, through its partnership with Fundation, also recently announced a new digital lending capability available to small businesses.
Citigroup Taking Steps to Provide Gender and Ethnicity Wage Data
Citigroup and Arjuna Capital said in a statement yesterday that Citi is taking steps to provide gender and ethnicity wage data in an effort to help closing the pay gap, making it the first U.S. bank to respond to shareholder concerns. In response to Citi’s steps, Arjuna Capital withdrew its gender pay shareholder proposal that it had submitted to Citigroup Inc. on Nov. 13, 2017 regarding gender pay equity submitted under Rule 14a-8 for inclusion in Citigroup’s 2018 proxy statement on behalf of Hilda Toth Maibach. Citi’s announcement represents a major shift for U.S. banks and credit card companies, since no financial services company so far targeted by shareholders for gender pay has taken such action. Bank of America, MasterCard, American Express, JP Morgan, Wells Fargo and Citi all rejected proposals in 2017 asking for detailed reports on the percentage pay gap between male and female employees across race and ethnicity, including base, bonus and equity compensation, policies to address that gap, the methodology used and quantitative reduction targets. To date, Citi is the first bank targeted to respond with quantitative reporting. Arjuna Capital, which in 2016 succeeded in getting seven tech companies to disclose their gender pay gaps, filed nine shareholder proposals for the 2018 proxy season, asking Citibank, J.P. Morgan, Wells Fargo, Bank of America, Bank of New York Mellon, AmEx, Mastercard, Reinsurance Group and Progressive Insurance to publish the companies’ policies and goals to reduce the gender pay gap. BNE
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